Traditional Block and Index
With this strategy, your energy in the block is billed at a fixed price and any energy used above the block is billed at the index market rate. You can execute a block at the time you do your initial supply contract or you can initially be billed 100% index and execute blocks in the future. Different energy suppliers will offer different options. These blocks can also include on and off-peak usage, and vary in quantity of energy.
Best for: Organizations with a predictable, steady base load.
Load-Following Block and Index
Although it is impossible to predict exactly how much energy you will use at any given time, you can use your load shape (energy usage pattern) as a guide to hedging. If your organization doesn’t have a predictable base load, a load-following block product may be a better fit for you. Load-following block and Index allows you to hedge a certain percentage of your energy usage despite volumes that fluctuate over time.
From a supplier’s perspective, it is harder for them to manage a Load-Following Block and Index contract within their portfolio, so you will likely pay a price premium over a Traditional Block and Index contract.
Best for: If your organization does not use a steady base load of energy year-round, a Load-Following Block and Index product may be right for you. Although you may pay a price premium over a traditional block strategy, you will still be able to fix a portion of your usage while leaving yourself open to market buying opportunities.